The Federal Reserve: Three Years Late--But They Did It!!

The central bank has now laid out specific numbers for the inflation and unemployment rates that will lead it to raise interest rates. The Fed now expects to keep its easy money policies in place until unemployment rate reaches 6.5 percent or inflation looks set to exceed 2.5 percent. This is a full-on embrace of a proposal first outlined by Chicago Fed President Charles Evans in 2011 that has gained support from other Fed officials over the course of this year.

This is a big deal….

[T]he Fed is explicitly stating that it can envision letting inflation float above—but only a bit above—its 2 percent target as a price for getting the job market back on track… this one was a surprise...

Comments

The central bank has now laid out specific numbers for the inflation and unemployment rates that will lead it to raise interest rates. The Fed now expects to keep its easy money policies in place until unemployment rate reaches 6.5 percent or inflation looks set to exceed 2.5 percent. This is a full-on embrace of a proposal first outlined by Chicago Fed President Charles Evans in 2011 that has gained support from other Fed officials over the course of this year.

This is a big deal….

[T]he Fed is explicitly stating that it can envision letting inflation float above—but only a bit above—its 2 percent target as a price for getting the job market back on track… this one was a surprise...